All 50 states and the District of Columbia have Medicaid Estate Recovery Programs (MERP). The program was made mandatory after the passing of the Omnibus Budget Reconciliation Act of 1993. Notably, after the death of a Medicaid recipient, MERP provides means for the state to get reimbursed for the funds it spends on long-term care of that person. These home care expenses can be categorized into in-home care, community-based care, such as adult day care and assisted living services, or nursing home care.
A big concern for most elderly people and adult children with aging parents, who need Medicaid assistance to reside in a nursing home, is what will happen to the home once the elderly individual moves to a nursing home. This piece focuses on the details of Medicaid Estate Recovery and how it could affect their estate planning.
What Are the Medicaid Estate Recovery Programs Rules?
The following are a few rules to keep in mind when it comes to Medicaid Estate Recovery Programs (MERP):
- MERP process doesn’t apply when the Medicaid recipient is still living but after the recipient is dead or is unmarried. As such, if a Medicaid beneficiary dies and still has a living spouse, Medicaid won’t attempt to recover the long-term care costs.
- A deceased Medicaid recipient who was not 55+ years old at the time of their death is exempted from MERP, meaning that the state won’t attempt to recover funds it spends on their long-term care Medicaid except for such persons.
- In most states, Medicaid Estate Recovery Programs (MERP) have a limited time frame in which the state can file for estate recovery, which is usually one year after the death of a Medicaid beneficiary.
Can The Medicaid Estate Recovery Program Take My House? Different Scenarios Explained
The following are some of the scenarios under which MERP applies or may fail to apply:
- Single and living alone in the home: If you reside alone in a home with equity under a specific limit, Medicaid won’t take your home. Currently, that amount is $603,000 in North Carolina. If your home is not counted towards the asset limit and you get long-term care support from Medicaid, the state can file a recovery claim after your death.
- Single and moving to a nursing home: When relocating to a nursing home, you can provide a written statement indicating your “intent to return home” for your home to be exempted under Medicaid rules. Without the “intent to return home” statement, your home will not be protected from Medicaid while you are in a nursing home. However, upon your death, the state may still file an estate recovery claim against your home to recover your nursing home expenses.
- Single and grown children living in the home: If one of your grown children is disabled or blind, your home is considered “exempt” regardless of your equity interest. However, if all of your grown children are healthy, your home will not be exempt even if they live in it. If you have grown and healthy children living in the home, you can protect your home by filing an “intent to return home” statement to show you have plans to move back to your home in the future. However, this can only protect your home from Medicaid for the time you are alive. After passing on, Medicaid will try to collect your long-term care fees via Medicaid estate recovery. However, the state will not take your home if you have a blind, minor or disabled child.
- Single and has passed away: If you are a single Medicaid recipient, the state will attempt to recover the cost of long-term care through a home sale. However, the state won’t do this if you have a child that is disabled, blind, or under 21 years of age at the time of your death.
- Married with one spouse living in a nursing home: If one spouse relocates to a Medicaid-funded nursing home, the remaining spouse is considered the community spouse. The spouse retains the house regardless of the equity value in the home. If you are the community spouse, it is advisable to have the home’s title solely in your name to prevent Medicaid from making an estate recovery claim upon the death of your spouse.
- Married and one spouse in a nursing home dies: In some states, Medicaid estate recovery will attempt to recover long-term care costs from the sale of a home after the death of the living spouse. Others will only try to recover the costs if the surviving spouse was also a Medicaid recipient upon their death.
What Can I Do to Protect the Home?
Keep assets out of probate
Most states seeking Medicaid estate recovery via probate put only the assets solely owned by the deceased in probate. If the house is co-owned, it won’t go to probate. You can keep the home from the Medicaid recovery program by keeping it out of probate.
Use irrevocable trusts
You can also protect your home through an irrevocable trust that holds the title to the property. With an irrevocable trust, the trustee typically manages the trust. The person who created the trust is therefore not considered as the owner of the asset. You can also name one of your children as a beneficiary to protect a home as an inheritance.
Leverage the long term care partnership program
Long term care partnership program is a tool that protects all or a portion of a Medicaid beneficiary’s assets from Medicaid estate recovery and Medicaid’s asset limit. These programs originate from a collaboration between private insurance companies selling long-term care partnership policies and Medicaid programs.
Use the sibling exemption
The Sibling Exemption program allows for the home of a Medicaid home care beneficiary to be transferred to a sibling who becomes part-owner of the house. However, the sibling must have lived in the house for at least one year before their sibling moved into a Medicaid-funded nursing home.
Get Help from a Medicaid Attorney
Protecting your home from the Medicaid Estate Recovery Program can be a long and complicated process. Luckily, you won’t have to do this alone. Seeking the counsel of an experienced Medicaid attorney is an essential step towards protecting your home from Medicaid’s estate recovery program.
David E Anderson PLLC is here and ready to help. While we do not currently assist with Medicaid planning, we have trusted referral sources who can help. If you have a loved one who passed away while receiving Medicaid assistance, we are happy to speak with you about how we can help you properly navigate through the probate process. Call today or fill out our online form to schedule a consultation!